Lt. Gov. Dan Patrick and House Speaker Dade Phelan on Monday announced they reached a deal on a historic $18 billion tax-relief plan for Texas property owners.
The deal ends a monthlong stalemate that turned into a public battle between the state’s top GOP leaders over property taxes.
Mr. Patrick’s stance was focused on a plan that combined the compression of schools’ M&O taxes and increasing the state’s homestead exemption.
Mr. Phelan’s plan, backed by Republican Gov. Greg Abbott, was based on tax-rate compression that would provide the greatest benefit to wealthier homeowners and businesses.
“Reducing property taxes, providing relief to small business owners and reforming our appraisal system will ensure economic growth and prosperity, and this agreement is a significant victory for all Texans,” Mr. Phelan said.
The legislation also delivers on Gov. Abbott’s promise to cut property taxes with a large portion of the state’s record $32 billion budget surplus.
Mr. Patrick and Mr. Phelan said that they, along with members of both chambers, worked “day and night” last week to “reach a consensus.”
- Over $12 billion of the surplus will be spent on reducing the school property tax rate for all homeowners and business property owners.
- All homeowners who homestead their property (approximately 5.7 million homeowners) will get a $100,000 homestead exemption.
- Non-homesteaded residential and commercial properties worth $5 million and below will receive a 20 percent circuit breaker on appraised value as part of a three-year pilot project. A property tax circuit breaker limits or reduces the taxes when a property tax bill exceeds a certain percentage of the taxpayer’s income, according to the Institute on Taxation and Policy.
- The legislation will include franchise tax savings for small businesses and create newly elected positions on local appraisal boards.
House Democrat Chair Rep. Trey Martinez Fischer called out the omission as “inexplicable” and “cruel.”
The legislation called for a $2,000 payment to every full-time teacher in Texas and an additional $4,000 for teachers in districts with fewer than 20,000 students to help close the pay gap between urban, suburban, and rural teachers.
“The House decided they wanted just to keep separate from the property tax bill and I respected that,” Mr. Patrick said. “We will address that in a later session, and look, we’re going to get teachers a pay raise.”
Two Special Legislative Sessions
Late last month, Gov. Abbott called lawmakers back to work for a second legislative session after the House and Senate failed to reach a deal to reduce property taxes.The governor’s first 30-day special session, which ended June 27, was focused on reducing property taxes and border security, but the chambers failed to make deals on either issue.
Hours after the first special session ended, Gov. Abbott announced the second session and narrowed the focus to one item—property taxes. He vowed to continue calling sessions until the House and Senate came to an agreement on property tax reduction.
Proposed Legislation Approval?
The omnibus property tax relief bill and franchise tax relief bill, both originating in the Senate, were filed on Monday.The lawmakers said they expect to pass the proposed legislation later this week.